gmhTODAY 13 gmhToday March April 2017 - Page 68

A Primer on Mortgage Insurance

By Jayson Stebbins Mortgage Professional

Many buyers in Santa Clara and surrounding counties have purchased their homes with loans that required Mortgage Insurance . Mortgage Insurance ( MI ) is a requirement on some programs when you buy a home with less than 20 % down . MI is also required when you buy a home with a government-backed program like an FHA loan or a USDA loan .

The most common questions about MI ( sometimes called Private Mortgage Insurance or PMI ) are these : how do I avoid paying it , and how do we remove it once we have it ?
MI avoidance is not always easy especially since most of the time it requires a 20 % down payment . Here are some ways to avoid paying MI :
1 ) First and Second mortgage combos : Using a combination of a first mortgage and a second mortgage , you can eliminate the MI requirement and still put as little as 10 % down . This creates value as every dollar of your payment is now eligible for the interest deduction at year end .
2 ) Higher rate : some programs exist that will allow you to do as little as 5 % or 10 % down and have no MI , but you will pay for it in a higher interest rate . When you look at the payment side by side many times the higher rate does not result in a higher payment as MI is out of the picture , and again every dollar of the payment is now a benefit on the tax return .
3 ) Buying out the MI : it is possible to do a one-time payment and pay the MI all at once . Usually the cancelled monthly MI payment will result in a manageable recapture over time , and could justify the upfront expense .
As for the removal of MI , it is important to note that some programs do not allow it at all . In the past decade the rules of MI removal have changed many times , so the removal of MI depends on the age and type of your mortgage . Here is a quick primer :
FHA loan : depending on when you closed on your FHA loan , the only way to remove the MI is through a refinance into a new loan . Older FHA loans have a formula that allows removal without a refinance . Contact your lender for more information on how they handle the removal .
Conventional loan : this is the loan that has the easiest path to MI removal . Refinance is always an option . However , if you have built your equity position to 20 % you can petition the removal of MI by your lender . They may require an independent appraisal or other documentation to comply with the removal . Check the disclosures on MI in your original loan package for details .
Other loans like USDA do not allow for MI removal so a refinance would be the only way to remove the monthly MI liability .
When strategizing about MI , it is always good to look at your long-term plan , shortterm cash flow , and the power of money . Sometimes MI is unavoidable , but with some creative thinking and planning you can make other solutions work for your family .
Jayson Stebbins is a 23 year veteran of the Mortgage Banking industry and an Accredited Mortgage Professional through the Mortgage Bankers Association . He grew up in Morgan Hill and currently lives in Gilroy . He is the local Branch Manager of Guild Mortgage , a 56 year old mortgage banking firm . His office is in Morgan Hill and serves all of Santa Clara , San Benito , and Monterey counties . You can reach Jayson and his Team at 408-782-8800 or at jstebbins @ guildmortgage . net
Jayson Stebbins is a licensed mortgage agent in CA for Guild Mortgage Company NMLS # 38463 ; Licensed by CA Disclosure : Licensed by the Department of Business Oversight under the California Residential Mortgage Lending Act . NMLS Company Unique ID 3274 ; Branch Unique ID 38480 . The postings on this editorial don ’ t necessarily represent the positions , strategies or opinions of Guild Mortgage Company or its affiliates . This information is not guaranteed to be accurate and shall not be construed as a guarantee of loan approval . All loans are subject to underwriter approval , and are subject to change without notice . Equal Housing Lender .
Guild Mortgage Company presents

Learn How You Can Buy A Home in Silicon Valley

Free Seminar showcasng many financial options available to you
Saturday , March 25th , 2017 at the Morgan Hill Community and Cultural Center
Madrone Room • 10 am to Noon ( lunch will be provided and there is a free raffle at noon )
RSVP : nperino @ guildmortgage . net or call 408.782.8800
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GILROY • MORGAN HILL • SAN MARTIN MARCH / APRIL 2017 gmhtoday . com
M A Primer on Mortgage Insurance any buyers in Santa Clara and surrounding counties have purchased their homes with loans that required Mortgage Insurance. Mortgage Insurance (MI) is a requirement on some programs when you buy a home with less than 20% down. MI is also required when you buy a home with a government-backed program like an FHA loan or a USDA loan. The most common questions about MI (sometimes called Private Mortgage Insurance or PMI) are these: how do I avoid paying it, and how do we remove it once we have it? MI avoidance is not always easy especially since most of the time it requires a 20% down payment. Here are some ways to avoid paying MI: 1) First and Second mortgage combos: Using a combination of a first mortgage and a second mortgage, you can eliminate the MI requirement and still put as little as 10% down. This creates value as every dol- lar of your payment is now eligible for the interest deduction at year end. 2) Higher rate: some programs exist that will allow you to do as little as 5% or 10% down and have no MI, but you will pay for it in a higher interest rate. When you look at the payment side by side many times the higher rate does not result in a higher payment as MI is out of the picture, and again every dollar of the payment is now a benefit on the tax return. By Jayson Stebbins Mortgage Professional Jayson Stebbins is a 23 year veteran of the Mortgage Banking industry and an Accredited Mortgage Professional through the Mortgage Bankers Association. He grew up in Morgan Hill and currently lives in Gilroy. He is the local Branch Manager of Guild Mortgage, a 56 year old mortgage banking firm. His office is in Morgan Hill and serves all of Santa Clara, San Benito, and Monterey counties. You can reach Jayson and his Team at 408-782-8800 or at jstebbins@guildmortgage.net 3) Buying out the MI: it is possible to do a one-time payment and pay the MI all at once. Usually the cancelled monthly MI payment will result in a manageable recapture over time, and could justify the upfront expense. As for the removal of MI, it is important to note that some programs do not allow it at all. In the past decade the rules of MI removal have changed many times, so the removal of MI depends on the age and type of your mortgage. Here is a quick primer: FHA loan: depending on when you closed on your FHA loan, the only way to remove the MI is through a refinance into a new loan. Older FHA loans have a formula that allows removal without a refinance. Contact your lender for more information on how they handle the removal. Conventional F22FRFB2FRV6W7BFFԒ&Vf&Vf6R2v2FvWfW"`RfR'VBW"WVG6FF#PR6WFFFR&VfbԒ'W VFW"FW&WV&RFWVFV@&6"FW"F7VVFFF6ǐvFFR&Vf6V6FRF667W&W2ԒW"&v6vRf"FWF2FW"2ƖRU4DFBrf Ԓ&Vf6&Vf6RvVB&RFRǐvF&VfRFRFǒԒƖ&ƗGvV7G&FVvr&WBԒB2v0vBFBW"rFW&6'BЧFW&66frBFRvW"bW6WFW2Ԓ2VfF&R'WBvF6P7&VFfRF涖rBrR6PFW"6WF2v&f"W"f֖ǒद67FV&&22Ɩ6V6VB'FvvRvVB4f"wVB'FvvR6233Cc3Ɩ6V6VB'*4F667W&SƖ6V6VB'FRFW'FVBb'W6W72fW'6vBVFW"FR6Ɩf&&W6FVF'FvvRVFr7B*26VVRB3#sC'&6VVRB3CFP7Fw2F2VFF&F( BV6W76&ǒ&W&W6VBFR6F27G&FVvW2"2bwVB'FvvP6"G2ffƖFW2*F2f&F2BwV&FVVBF&R67W&FRB6B&R67G'VVB0wV&FVRb&f*2&R7V&V7BFVFW'w&FW"&fB&R7V&V7BF6vPvFWBF6R* *WVW6rVFW"wVB'FvvR6&W6VG0V&rR6'WR6Ɩ6fWg&VR6V֖"6v66rf6F2f&RFP6GW&F&6#WF#rBFR&v6VGB7VGW&6VFW G&R&( "FV6v&R&fFVBBFW&R2g&VR&ffRB␥%5eW&wVF'FvvRWB"6Cs"ッct$( "$t( "4%D$4$#pvևFF6